Correlation Between New Oriental and United Rentals
Can any of the company-specific risk be diversified away by investing in both New Oriental and United Rentals at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining New Oriental and United Rentals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Oriental Education and United Rentals, you can compare the effects of market volatilities on New Oriental and United Rentals and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in New Oriental with a short position of United Rentals. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Oriental and United Rentals.
Diversification Opportunities for New Oriental and United Rentals
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between New and United is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding New Oriental Education and United Rentals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Rentals and New Oriental is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on New Oriental Education are associated (or correlated) with United Rentals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Rentals has no effect on the direction of New Oriental i.e., New Oriental and United Rentals go up and down completely randomly.
Pair Corralation between New Oriental and United Rentals
Assuming the 90 days trading horizon New Oriental Education is expected to under-perform the United Rentals. But the stock apears to be less risky and, when comparing its historical volatility, New Oriental Education is 1.41 times less risky than United Rentals. The stock trades about -0.12 of its potential returns per unit of risk. The United Rentals is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 16,843 in United Rentals on August 31, 2024 and sell it today you would earn a total of 1,847 from holding United Rentals or generate 10.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Oriental Education vs. United Rentals
Performance |
| Timeline |
| New Oriental Education |
| United Rentals |
New Oriental and United Rentals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Oriental and United Rentals
The main advantage of trading using opposite New Oriental and United Rentals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Oriental position performs unexpectedly, United Rentals can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in United Rentals will offset losses from the drop in United Rentals' long position.| New Oriental vs. TAL Education Group | New Oriental vs. Fras le SA | New Oriental vs. Energisa SA | New Oriental vs. Clave Indices De |
| United Rentals vs. Localiza Rent a | United Rentals vs. Vamos Locao de | United Rentals vs. Movida Participaes SA |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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